Payday lenders are often noted as preditory because interest rates are high.

AUSTIN — The week before Christmas the Houston City Council voted overwhelmingly to regulate the so-called payday and auto title lenders, the largely unregulated industry critics call predatory because it often charges interest rates of 500 percent or more if borrowers don’t repay their short-term loans on time.

Lubbock’s city leaders are now hoping to find a way to do the same.

The resolution to create a task force addressing payday lending has been delayed for several weeks, but Lubbock City Councilman Todd Klein hopes the council will take action on it at its meeting Thursday.

“There is no way for it to not benefit unless we simply don’t do it,” Klein said.

There is a need for these types of loans, but Klein said he’d like to see alternative options on the table as well.

Houston Councilman Andrew Burks said the city had no choice because the Texas Legislature has failed to pass legislation that would regulate the state’s $4 billion-a-year industry.

“Our Legislature, they had the ball and dropped it,” Burks said before the 15-2 vote, the Houston Chronicle reported. “I don’t like this, but I have to vote for it because … this is the only thing on the table, and it does something.”

Houston joined Austin, Dallas, El Paso, San Antonio and more than a dozen other Texas cities that have passed similar ordinances in recent years.

Could Amarillo and Lubbock be next?

The Amarillo City Commission will consider the possibility of an ordinance later this year, said Mayor Paul Harpole. Klein’s ordinance, if passed, would give the task force research and advisory responsibilities that would allow the city to move forward on a bill in the future. The aim of the task force is to influence state leaders to initiate regulations that protect citizens from the triple-digit interest rates that often accompany payday loans.

“I’ve always promoted partnerships as a way of getting things done,” Klein said.

If the Legislature doesn’t take action, Klein said the information compiled by the task force can serve as a starting point for municipal regulation.

For consumer advocates and even for some state legislators, there is no point bothering with the Legislature. If Amarillo, Lubbock and other Texas communities want more regulation of the payday and auto title lenders, they must pass their own ordinances because the Legislature does not have the will to approve any state oversight, they argue.

“Amarillo, Lubbock and other cities would probably be better off if they passed their own ordinances because it looks like (in the 2015 session) there’ll be another uphill battle to pass meaningful payday legislation,” consumer advocate Don Baylor said.

The March 4 Republican primary defeat of Sen. John Carona of Dallas and the likelihood of a more conservative Texas Senate cast serious doubts the Legislature can pass any payday lending reforms next year, said Baylor, senior policy analyst at the liberal think tank Center for Public Policy Priorities.

In the last two sessions Carona filed bills to regulate the industry but his proposals failed because — as he said on the Senate floor last year — the industry’s lobby is too powerful.

The prospects of an another failed attempt in the 2015 session prompted Reps. Tom Craddick, R-Midland, and Mike Villarreal, D-San Antonio — who filed similar proposals last year and intend to try again next year — to advise cities to pass their own ordinances.

“It is time for Midland, Odessa and other West Texas cities to step up and protect their residents from predatory payday and auto title loans,” Craddick and Villarreal wrote in a March 31 op-ed column in the Midland Reporter-Telegram.

Industry officials counter such criticism, saying the approximately 3,500 stores in the state — including 33 in Lubbock and 25 in Amarillo — allow cash-strapped consumers to get instant loans, especially when they have an emergency.

“The industry provides a needed service,” spokesman Rob Norcross said. “I worked with banks and credit unions in the past and because of their restrictions, it is extremely difficult for banks and credit unions to make loans of less than $5,000, especially when there is no collateral.”

Most payday loans are for less than $1,000.

Rep. Four Price said though he understands the frustration of his House colleagues and of consumer advocates, he is not ready to declare payday lending reform bills dead on arrival.

“I think there are a lot of members who agree that sensible reform is needed,” Price, R-Amarillo, said. “Payday lending is more prevalent now, and the members are seeing what some of the cities they represent are doing.”

Regardless of what happens next year, the payday lending issue is expected to remain in the spotlight. It has even become an issue in this year’s gubernatorial race.

Democrat Wendy Davis has accused Republican Greg Abbott of being in the pocket of the industry. On Jan. 4, Davis accused Abbott — the Texas attorney general for 11 years — of receiving at least $195,000 in campaign contributions from the industry.

However, the Davis campaign had to drastically revise its figures because a day earlier its estimate was of nearly $400,000.

In December, William White, chairman of the Finance Commission of Texas — the agency charged with protecting Texas consumers — told the El Paso Times it is the borrowers, not the lenders, who are responsible when they get trapped in a cycle of debt.

“People are responsible for their decisions, just like in my life and in your life,” White, an appointee of Gov. Rick Perry and vice president of Cash America, one of the largest payday lenders, told the newspaper.